Fintech in the Exchange Industry: Potential for Disruption?

Abstract

The recent growth of financial technology ventures involves several types of financial players, including stock exchanges. Many of them are exploring blockchain applications to their multiple business lines, focusing in particular on post trading activities. Potential benefits include the reduction in counterparty risk and post trading costs as well as the increase of liquidity and transparency. At current stage exchanges are mainly exploring the technology looking for proofs of concept, with the exception of some more advanced projects like at Nasdaq and ASX. The mass adoption will require longer efforts and is expected to come in a decade, at least. Fintech developments are receiving strong attention also by regulators and international organizations, given the potential of distributed ledger technology for both competition enhancement and cyber risk reduction. A coordination between market players and regulators is essential to guarantee the effective implementation of new technologies, as their benefits can be delivered only in presence of a common framework and a proper management of risks.